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20 July 2018

Tax rev­enue in June 2018

Information on tax revenue from the Finance Ministry’s monthly report for July 2018.

Trends in general government tax revenue

Current-year trends in tax revenue (excluding local authority taxes)

2018

June

Year‑on‑year
change

January to

June

Year‑on‑year
change

2018 estimates4

Year‑on‑year
change

in €m

in %

in €m

in %

in €m

in %

Joint taxes

           

Wages tax2

18,212

+5.2

99,454

+6.3

206,450

+5.6

Assessed income tax

13,143

+0.0

32,529

+2.2

61,650

+3.7

Non-assessed taxes on earnings

4,722

+137.3

12,843

+39.3

21,900

+4.7

Final withholding tax on interest and capital gains

390

 -16.3

4,489

+7.8

7,895

+7.7

Corporation tax

8,035

+14.1

18,720

+14.3

32,330

+10.5

Value added taxes (VAT)

18,901

+5.7

115,050

+3.0

235,000

+3.8

Trade tax apportionment

2

X

1,395

+1.0

4,758

+1.6

Increased trade tax apportionment

1

X

1,111

 -0.4

3,899

+0.1

Total joint taxes

63,407

+9.6

285,591

+6.0

573,882

+4.8

Federal taxes

 

 

 

 

 

 

Energy duty

3,608

+2.7

15,022

+0.8

41,300

+0.7

Tobacco duty

1,054

 -17.0

5,910

 -5.8

14,160

-1.7

Spirits duty incl. alcopops duty

142

 -8.3

1,058

+0.3

2,100

+0.3

Insurance tax

674

+2.6

8,830

+3.5

13,670

+3.0

Electricity duty

674

 -1.8

3,530

+0.0

6,930

-0.2

Motor vehicle tax

820

 -2.7

4,963

+1.1

9,010

+0.7

Aviation tax

100

+5.6

482

+3.0

1,175

+4.9

Nuclear fuel duty

0

X

0

X

0

X

Solidarity surcharge

2,575

+5.3

9,714

+6.4

18,750

+4.4

Other federal taxes

110

 -6.9

717

+0.0

1,467

+1.5

Total federal taxes

9,758

+178.8

50,226

+16.2

108,562

+8.6

Länder taxes

 

 

 

 

 

 

Inheritance tax

652

+15.8

3,598

+13.2

6,020

-1.5

Real property transfer tax

1,097

+2.2

6,846

+5.5

13,900

+5.8

Betting and lottery tax

160

+2.1

949

 -1.6

1,851

+0.8

Beer duty

69

+4.5

317

 -0.2

665

+0.1

Other Länder taxes

30

+4.2

297

+1.9

465

+3.1

Total Länder taxes

2,007

+6.3

12,006

+6.8

22,901

+3.1

EU own resources

 

 

 

 

 

 

Customs duty

382

 -14.2

2,390

 -4.6

5,200

+2.7

VAT-based own resources

154

 -21.6

1,199

+1.5

2,510

+6.3

GNI-based own resources

1,161

 -30.0

9,347

+72.2

22,610

+58.6

Total EU own resources

1,698

 -26.2

12,936

+42.0

30,320

+39.8

Federation3

35,605

+36.5

158,830

+7.2

321,336

+3.9

Länder 3

32,892

+9.0

154,399

+5.2

310,276

+4.0

EU

1,698

 -26.2

12,936

+42.0

30,320

+39.8

Local authorities’ share of income tax and value added tax

5,360

+5.0

24,048

+7.7

48,613

+7.7

Total tax revenue (excluding local authority taxes)

75,555

+18.7

350,213

+7.3

710,545

+5.3

Tax revenue in June 2018

Total tax revenue (excluding local authority taxes) was up by 18.7% in June 2018 over the same month last year. However, this rise was significantly overstated: On 13 April 2017, the Federal Constitutional Court ruled that nuclear fuel duty was unconstitutional and therefore null and void. As a result, approximately €6.3bn in nuclear fuel duty had to be returned in June 2017. If this effect is left out of the equation, however, total tax revenue still rose by 8.0%. This was mainly driven by a 9.6% increase in the yield from joint taxes, which made up 84% of total tax revenue (excluding local authority taxes). Alongside wages tax and value added taxes, which are the two taxes that generate the most revenue, non-assessed taxes on earnings and corporation tax also contributed significantly to the rise in joint tax receipts. In contrast, revenue from assessed income tax remained stagnant, while the take from final withholding tax on interest and capital gains declined. Revenue from taxes accruing solely to the Federation was up by 178.8% on the year. However, excluding nuclear fuel duty results in a slight decline of 0.3%. Revenue from taxes accruing to the Länder rose by 6.3% in year-on-year terms.

EU own resources

Transfers of own resources to the EU, including customs duties, fell by 26.2% on the year in June 2018, to roughly €1.7bn. Transfers to the EU are based on the planned financial framework for 2018, with fluctuations over the course of the year depending on the EU’s financing needs at any given time.

Cumulative overview of the January–June 2018 period

In the first half of 2018, total tax receipts increased by 7.3% on the year. Broken down by category, revenue from joint taxes was up by 6.0%, receipts from federal taxes were up by 16.2%, and the yield from Länder taxes was up by 6.8%.

Distribution among the Federation, Länder and local authorities

The Federation’s tax receipts (after accounting for supplementary federal grants to the Länder ) were up by 36.5% on the year in June 2018. If nuclear fuel duty is excluded, the increase was 10.0%. Länder tax receipts also recorded a marked year-on-year gain of 9.0%. All government levels benefited from the strong performance currently displayed by joint taxes. The local authorities’ take from joint taxes was up by 5.0% on the year.

Joint taxes

Wages tax

Wages tax receipts again recorded strong growth in June 2018, with gross revenue from this tax increasing by 4.2% on the year. The figure reflects the stable labour market and rising wages. Child benefit payments – which are financed from receipts from wages tax – rose by 0.4% on the year in June 2018. It should be noted that this figure is skewed significantly due to the fact that one Land is experiencing problems in preparing the underlying data. After adjusting for this, there was an increase of approximately 3% in child benefit payments, which puts the rise in gross wages tax receipts at roughly 4.8%. However, this effect had no impact on cash receipts. On balance, cash receipts from wages tax increased by 5.2% in year-on-year terms in June 2018. Taken cumulatively, cash receipts from wages tax were up by 6.3% on the year in the first half of 2018.

Corporation tax

Corporation tax receipts recorded a year-on-year gain of 14.1% in June, the second month of the year when corporation tax prepayments are due. Prepayments for the current year, already at a high level, rose by another 7%. Assessments made in older cases (especially in connection with audits) resulted in higher back-payments and noticeably lower refunds. After subtracting investment allowances, cash receipts from corporation tax were up by 14.1% on the year in June 2018. Cumulative cash receipts from corporation tax grew by 14.3% in year-on-year terms in the first half of 2018.

Assessed income tax

Gross revenue from assessed income tax was up by 1.7% over June 2017. For this tax, too, June is when the second instalments of prepayments fall due. As with corporation tax, prepayments recorded a gain on an already high level, although, at 4%, the increase was not as strong in the case of assessed income tax. However, the climb in prepayments was partially cancelled out by ongoing tax assessment activities, which resulted in higher refunds in conjunction with an unchanged level of back-payments. Employee refunds also posted a rise (of 16.6%). After subtracting these (along with investment allowance payments and owner-occupied homes premiums, which are negligible in terms of amount), net cash receipts from income tax remained at last year’s level. In cumulative terms, cash receipts from assessed income tax were up by 2.2% on the year in the first half of 2018.

Non-assessed taxes on earnings

Gross revenue from non-assessed taxes on earnings more than doubled in June 2018, posting a gain of 126.8% on the year. Combined with the decline in refunds paid out by the Federal Central Tax Office, which are financed from this revenue, cash receipts from non-assessed taxes on earnings rose by 137.3% in June 2018. This unusually large increase in June also affected cumulative cash receipts from this tax for the entire first half of 2018, which were up by 39.3% on the year. However, the coming months can be expected to bring successive drops in revenue, resulting in a gradual decline in the cumulative rate of growth. This is because the increase seen to date is primarily a result of the fact that companies – major corporations in particular – paid out dividends earlier this year than they did last year.

Final withholding tax on interest and capital gains

Revenue from final withholding tax on interest and capital gains fell by 16.3% on the year in June 2018. This is likely to be primarily due to a year-on-year decline in tax revenue from capital gains. In cumulative terms, cash receipts from final withholding tax on interest and capital gains were up by 7.8% on the year in the first half of 2018.

Value added taxes

The yield from value added taxes posted a significant increase of 5.7% on the year in June 2018. Domestic VAT revenue was up by 6.6%, while import VAT receipts rose by 3.4% on the year. The trend in VAT revenue has been very volatile over the course of the year. Cumulative cash receipts from value added taxes recorded a year-on-year gain of 3.0% in the first half of 2018.

Taxes accruing to the Federation

Receipts from taxes accruing solely to the Federation were up by 178.8% on the year in June 2018. As described above, this surge can be explained by the fact that €6.3bn worth of nuclear fuel duty had to be paid back in June 2017. After adjusting for this effect, receipts from taxes accruing to the Federation saw a slight decline of 0.3%. Taxes posting revenue growth included solidarity surcharge (up by 5.3%), insurance tax (up by 2.6%) and energy duty (up by 2.7%). The take from tobacco duty declined by 17.0%, partly due to a temporal shift in revenue from June to July which occurred for technical reasons. Electricity duty and motor vehicle tax were down on the year (by 1.8% and 2.7%, respectively). Trends in revenue from other taxes had only a minor impact on the overall results for federal taxes.

Taxes accruing to the Länder

Revenue from taxes accruing solely to the Länder was up by 6.3% on the year in June 2018. This was driven by a rise in inheritance tax receipts (up by 15.8%) and a slight increase in revenue from real property transfer tax (up by 2.2%). Trends in revenue from other taxes accruing to the Länder were also positive, with gains posted for beer duty (up by 4.5%), fire protection tax (up by 4.3%) as well as betting and lottery tax (up by 2.1%).